Tag Archives: Matveev

Russian State Capitalism Part III: How can Russia be neoliberal and dirigiste at the same time?

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coexistence of the old, not so old, and the new in downtown Moscow

This is the third in a series of posts on ‘everyday’ political economy. The long read is now published here.

In a post back in May, I outlined the usefulness of Ilya Matveev’s work on state capitalism. To recap: Matveev sees 2004-8 as the pendulum in Russia swinging back to incomplete state domination of the Russian economy. Despite this, Russia maintains strong orthodox neoliberal policies. In the previous post my departure from Matveev was to start thinking about how neoliberalism as a form of governmentalizing ideology, is imposed on ordinary Russians, even in ‘state’ companies. I ended that post by pointing out that neoliberal subjectiviation is not lessened as a result of the Covid pandemic….

Neoliberalism refers to a way of thinking about organising social relations. It emphasizes ‘market competition [as] the basis of economic coordination, social distribution, and personal motivation’ (Sparke 2013: 454-5). Economic neoliberalism is a form of market rationality. Colin Hay (2004) provides a seven-point definition:

  1. the desirability of free capital mobility
  2. the ‘market’ as an efficient mechanism for allocation
  3. limited role for the state
  4. supply-side economics
  5. labour-market flexibility
  6. conditionality of welfare based on incentivizing market participation
  7. private finance seen as more allocatively efficient in provision of public goods

Governmentality is key to the maintenance of these relations as it links social life to the logic of what Foucault called the ‘enterprise society’. Governmentality is a process whereby subjectivity becomes increasingly dominated by discourses of self-regulation – inducing people to ‘work upon themselves’ to become ever more flexible to the demands of post-Fordism. This is not a simple top-down process of domination, however. Social control is produced though the active participation of individuals and groups in the regimentation of their own discipline. We have already seen how Matveev argues that the neoliberalism in Russia entails state involvement in supporting highly exploitative relations between individuals, firms and sectors. Stephen Collier (2011) adds to the perspective by returning to Foucault’s lectures on biopolitics to argue that rather than a focus on freeing markets per se, neoliberalism is about rethinking government according to an over-determined form of economistic reasoning.

The social state remains, but its governance ‘styles’ are influenced by ‘khoziaistvo’ – the legacy of Soviet integration of politics and economy based on a narrow, managerial conception of need fulfilment. For Collier, the present moment sees governmentality as a ‘formal rationality’ that privileges market thinking. He adopts the term ‘assemblage’ to trace the genealogy of Russian reform in the 1990s back to core neoliberal thinkers from the US. Moreover, the idea of biopolitics from which governmentality emerges has deep roots in Soviet planning – in ‘incentivisation’ at different scales of labour and production (Bockman and Eyal 2002).[1] Collier elsewhere (2012: 190) proposes synergy between activist states and marketized relations, underlining how neoliberalism as distinct from classical liberalism imagines a key role for governments ‘in creating the conditions for diffusion of markets and market-like mechanisms’ and may contain highly illiberal measures.

Peck and Theodore (2007) trace the debates on ‘global neoliberalism’ via diffusion through institutions, financial markets and foreign competition in the early twenty-first century. This approach anticipated a profound erosion of the nation state as adequate coordinator of the economic sphere. It focussed on the strategic interaction of mechanisms of routinized regulation at trans- and sub-national levels of analysis: ‘corporate governance, education and training, labor-market regulation’ (Peck and Theodore 2007: 744). Firm level and sector scales replace an overly broad-brush macroeconomic institutional framing but are themselves prone to functionalism. In the final analysis, the ‘varieties of capitalism’ approach, in seeking to acknowledge real geographical differences, supposes an unrealistic coherence that closer analysis does not justify. For example it is problematic to clump together as ‘coordinated’, models those market economies often synonymous with northern-European ordo-liberal types. Indeed, since the turn of the century, this criticism has been justified, as ‘coordinated’ models moved sharply towards their Anglo-Saxon ‘liberal’ brethren – especially in the spheres of labour market liberalization, and its corollary – welfare state residualization and retrenchment, two areas of interest in the Russian case (Oorschot and Gugushvili 2019). Variegated neoliberal convergence has in part replaced the ‘varieties’ approach. 

Peck and Theodore (2007: 755) anticipate a tide rising over all developed economies as relative institutional weaknesses fail to moderate or mitigate waves of neoliberal reforms when coordinated states face the entry of multilateral institutions who brought with them modes of rationalization and audit, self-monitoring and surveillance. These techniques are as important as any legislative or coherent ideological diktat. They then diffuse into new territories (such as state bureaucracies) via true ideologies such as New Public Management (NPM) (see Romanov 2008 for a summary of its implementation in Russia [pdf opens automatically]).

Today, international institutions themselves, ironically, cannot find a reverse gear when they need to because of their immanent neoliberal logic. For example the IMF stresses the need for slower adjustment and more progressive taxation in Russia because of Covid-19, but immediately reverts to ‘neoliberal type’ to suggest VAT rises and reduced payroll taxes as well as the need to ‘reduce the footprint of the state’ (IMF 2021). Peck and Theodore (2007) are a scholarly bellwether of the need for more thorough acknowledgement of the multi-scalar and multi-register insinuation of neoliberal governmentality and rationality into the political-economic fabric of societies.

I move on in the next post to Special Economic Zones in Russia as showing us evidence of just how pervasive neoliberal governmentality is in Russia, despite the relatively small penetration of transnational companies there.

[1] While Rupprecht (2020) agrees that Russian neoliberal thought has indigenous roots, he disagrees that the 1990s saw its implementation in any meaningful degree there.

Russian State Capitalism Part II – Matveev on dirigiste and neoliberal synergies

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So, as I said in my last post, I’m writing a long piece for Sotsvlasti – a social science journal in Russia on state capitalism and neoliberalism. In this second post I’ll mainly focus on Ilya Matveev’s work on Russia as a state-capital-neoliberal hybrid, because Matveev’s position is my main departure point. Matveev uses the term ‘state capitalism’ to propose a kind of elective affinity between neoliberal economics and elements of dirigiste industrial policy that maintain the position of economic elites and provide political stability, but which are uncoordinated with the private sector. Notably while the primitive accumulation associated with the 1990s privatisation processes and subsequent political conflict gets a lot of attention in scholarship, the relative security of property rights for ‘winning’ elites, and the longer term development of ‘normal’ forms of market accumulation, are overlooked according to Matveev.  Matveev here cites Daniel Triesman’s work on the misperception about the ‘legitimacy’, durability, and sources of wealth for many current financial elites. Triesman elsewhere has useful paper on the 1990s privatisation ‘loans for shares’ affair and how this  reflected a delayed transformation of Soviet elites into one flavour of postcommunist asset oligarchs. I obviously don’t share Triesman’s implicit Pollyanna approach to Russian economic transformation (creating new owners at any cost is justifiable).  

Matveev focusses on the period 2004-8 as a turn to ‘dirigisme’. Yukos is merely the most visible example of the expansion of de facto state ownership in the economy, with swathes of banking, oil and gas, and some industrial monopolies directly or indirectly state owned. Despite, experiments in pronatal social benefits and elements of autarkic developmentalist policy since 2014 that run against market philosophy, Matveev argues that Russia maintains orthodox neoliberal policies such as a strong monetarist bias, fiscal consolidation, and marketized mechanisms of discipline and competition in the public sector. Matveev provides clues to my main argument: the need to make a distinction between clientelist and patrimonial negotiations of relative power and access to capital resources within the elite, and a broad and deep set of policies that affect the lives of the majority of Russians in the private and public sectors. Objections to Matveev’s argument are striking for their misrecognition of fundamental changes that align with core deregulatory and ‘responsibilizing’ principles in biopolitics.

Translating the substance of this transformation into the language of popular politics, localized versions of terms like ‘austerity’, ‘the 1%’, ‘one rule for the rich’, ‘work no longer has dignity’, ‘the callous state’, ‘we are a country of paupers’,  resonate for Russians, W. Europeans, and N. Americans alike. Indeed, for workers in state-influenced or owned firms in strategic industries, exploitative and intensified labour conditions are similar to experiences of corporate change elsewhere,. My long-term underemployed research participant, Igor, reflects on his experience as a seasonal [na vakhtu] construction contractor with Yamal LNG in the far North, where 80% of Russia’s gas reserves are found. Yamal LNG is joint owned by Novatek, a private inheritor-firm of a Soviet pipe constructor, in which the Russian state has a 9% interest, China’s main energy SOE and others.

Like everywhere now a cleverly [khitro] designed small base ‘white’ [taxed] salary with bonuses that are impossible to earn. Again, like everywhere, there is a ‘black’ [unregistered, illegal] component of pay that is also withheld at will, as a kind of weapon over you.  Terrible conditions, worse than a prison camp. I quit ahead of my term because I got neither the days off, nor the travelling expenses in the contract. As a result, they wrote a terrible recommendation letter – without which I will not get another contract. We are just another item of brittle or pliable ‘inventar’ [equipment] to be used until it breaks (instead of a 12-hour shift we regularly worked 16). To me it’s like Russia is a slave colony, we just don’t use that term anymore. We ‘manage’ our slavery ourselves, with some help from machines and technology. [interview in Kaluga Region, summer 2019]

For me what’s important here is the presence of lay political-economic analysis that experience generates. In terms of everyday political economy, does it really matter whether one works for an SOE or not? This ‘everyday political economy’ is a framing device that hopefully will work in a book-length treatment.

Matveev’s analysis, while underlining that a serious study of state capitalism has its place in any analysis of Russia, should remind us that salient features are present in large measure in ‘core’ democratic states. By the same token, strategic ownership by the state and elite corruption does not alter the fundamental division between capital concentration, cartels, financialization and the rise of a rentier-class on the one hand, and the erosion of labour’s position, the retreat of the social state, and economic neoliberalism for the majority on the other.

 ‘State capitalism’ may exacerbate distortions in capital allocation towards favoured producers in weapons, metals or energy, and lead to spill-over into high levels of elite corruption. However, in the ‘core’ states, capital interests also make ‘good’ use of the state to entrench and ‘enmoat’ themselves into cartels in what look like ‘new’ industries, but whose final services are eternal necessities – consumer durables, transport, and information/entertainment (Amazon, Uber, Google). Where ‘disruptors’ arise, they rely, not only on financialization, but crucially, on tax subsidies and legislative capture or lag – Tesla being a prime example.

Covid-19 made these processes impossible to ignore, as one of the most deregulated of ‘free market’ states – the United Kingdom – engaged in some of the most corrupt practices of state-capital connivance – handing out production and service healthcare contracts without tender to crony insiders who gouged both citizens and state organisations. At the micro scale, in supposedly solid democratic states, severe impositions on freedom of movement and assembly are imposed that focus on the individual and her economic positioning. The reader will already see where I am going with this argument: that the varieties of capitalism approach is less useful than the evaluation of the objective and subjective economic relations as dictated by a logic of ‘neoliberal’ subjectivation. Explaining how that logic operates in Russia is a large part of the rest of my article and I’ll return to it in the future.

Covid field tales – Part Two: Unmasking State Capitalism or Capitalist Realism?

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A pharmacy in Omsk with the sign ‘We have no masks or antiseptic gel in stock’.

This is the second of a series of Covid tales, made possible by collaboration with Galina Orlova of HSE Moscow. There will be 3-4 texts  on different aspects of lockdown and postlockdown Moscow. These will be based on one long text that will appear shortly in the journal City and Society. That journal, thanks to my colleague Derek Pardue, who is editor, has published some amazing Covid despatches – they are open access –  so please check it out. Space in those dispatches is very limited, so here on the blog I will take a little bit more of a circuitous route.

The last post chronicled the rise of Moscow as the focal point of the disease and its spread in Russia, not we move on to how City Hall has dealt with lock down and in particular what this reveals about ‘State Capitalism’.

To avoid an official ‘state of emergency’ which would have meant taking on a massive financial burden, City Hall adopted various heuristics to manage quarantine. From March 5, the Moscow had a high-alert mode, from the 26th – self-isolation for those 65+, from the 30th – self-isolation for all. The delegation of responsibility for their own health and well-being to citizens, after recent restrictions on freedoms, looked neoliberal. At the same time, the scope of quarantine education addressed to ignorant citizens and belief in its effectiveness, suggested the return of Soviet sanitary propaganda (Shok, Beliakova, 2020). In conditions of lockdown uncertainty, the boundaries of self-isolation were delineated by rituals of taking out garbage, buying food and medicine, dog walking. From April 1, fines of 4,000-5,000 rubles were imposed for each violation. On April 15, quarantine met the control society with digital codes for trips around the city. Since May 12, wearing masks and gloves became mandatory in stores.

When the president empowered regions as responsible for fighting the disease, and the prime minister asked the Moscow mayor “organizationally and methodically” to help colleagues “on the ground”, Sobyanin became the face of the ”virus federalism” and the capital’s protocol “counteracting the spread of coronavirus infection” became a model to follow.

Unmasking state capitalism or capitalist realism?

While the self-isolation regime is gone, the ”glove-mask system” remains. Entering public transport or shops without PPE is prohibited – although it looks like the mask requirement will soon be dropped.  Disposable masks – medical blue, three-layered – are found far beyond pharmacies: at newspaper stands, at the ice cream kiosks, in cheap and expensive grocery chains. At the reopened farmfoods store, half-empty due to supply disruptions, masks are at a discount. In May, they cost from 29 to 70 rubles, in March-April – up to an exorbitant 150 and you could buy them only on the Internet from resellers, thirty-times more expensive than in 2019. Prices began to rise in February. At the peak, the government tried to mandate them, but immediately abandoned this measure. The rhythm of the pandemic in Moscow was not only the appearance or absence of masks, but their price in(de)flation.

In the Russia that imported the bulk of masks from China before Covid-19 there were three domestic manufacturers. City Hall not only took ownership of the largest factory but removed its facilities from the city of Vladimir to the capital, turning the pandemic into a “Moscow state business”. Two thirds of masks from the Moscow government (about 4 million items a week) were sold at cost to hospitals and communal services, 500,000 – for a “standardised price” of 30 rubles in the metro. The rest were put into a city administration reserve.

Compared to the free distribution of mask not only in the Paris metro, but on buses in Russia’s Far East, Moscow’s choices provoked discussion of the political economy of PPE. Vladimirites were disgusted by the capital’s betrayal leaving them not only without protection, but one profitable business less. Their objections to internal colonialism were tempered with racist suggestions that the masks from Moscow – now produced by “immigrants from disadvantaged countries of the near abroad” – were now “less hygienic”. Muscovites discussed the superprofit extracted by City Hall, and supposed that “since they bought the plant, the mask-regime will never end.” Stuck between epidemiological citizenship and city-state paternalism, they claimed that the government had no moral right to demand wearing masks without free distribution. Citizens made a hopeless diagnosis – “it’s all capitalism and they don’t give a shit” – and continued to buy masks.

The nature of state-capital conjunctions in the Russian capital has long been a bone of contention. The question of who can sell masks and gloves and who profits from their production is at the heart of thinking about the paradox of Russia’s political economy Ilya Matveev calls ‘dirigisme and neoliberalism at the same time’ to financially benefit insiders. Matveev has been criticised for this argument – with the riposte mainly about the piecemeal nature of actual liberalising reform since 2000. However in many ways that critique (from 2016) was misplaced, and I think the virus response illustrates Matveev’s view well – state capture by interests does not exclude the market ‘for thee, but not for me’. 

Appropriating profitable PPE businesses, strategically significant in an epidemic, City Hall enters the order of state capitalism. Obliging citizens to wear masks and offering them at commercial prices, they interpret civic responsibility in a neoliberal mode as a personal transaction according to the logic of capitalist realism that anathemizes any alternative to marketised relations (Fisher 2009).

Nonetheless the virus’ acceleration of neoliberalism does not completely destroy the legacy of the Soviet social state, instead weakening and transforming it beyond recognition. By sending masks to hospitals at cost price, Moscow combines the logic of minimal profitability and sluggish paternalism. Opting to create a reserve fund instead of free distribution of masks, it reproduces a pattern of deformed care without expenditure, developed by the federal government via the Russian Reserve Fund. State capital accumulation has a perverse obsession with curtailing the circulation – of money, of civic potential, – we call this the political economy of “the untouchable reserve”.

Emergency Reserve

‘Emergency reserve’. The untouchable reserve relates more to a strategic reserve of collected stock for emergency use.

In the next post we will discuss ‘disinfection’ and the ‘smart city’.

Challenging the view that Russians are ‘passive’.

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uncollected rubbish

uncollected rubbish from a designated municipal site.

 

In a previous post I talked about the phrase: ‘people are Russia’s replacement oil’ as representing a new extractive shift to harvesting economic rents in more intensively from ordinary people. In this post I want to talk about liberal pundits’ interpretation of this turn of events. A much truncated version of what I wrote below was part of a short piece for Ridl.io

But before that just a quick recap on the reality of ‘making ends meet’ for many Russians that I talked about previously. Ordinary people are suffering from a decade-long decline in their living standards putting them in a position of extreme want. Published average incomes may look survivable, but the reality is that, like in other unequal countries, such statistics are misleading not least because of the distorting effect of a small number of very high incomes. In 2018 average gross wages were 40000 rubles a month or $560. Whether this figure is fiddled or not, in any case it ignores the large effect of lower informal (undeclared) incomes, and the imbalance between big city state company employment and the rest.  Independent polling indicates that the ‘real’ average pay was less than 20000 rubles ($305). $300 is not even a subsistence wage. Even adding to it a lower secondary wage, a family is left virtually nothing for clothing, medicines, travel or spending on children. When trying to measure relative poverty a robust measure is how much a family spends on food and other essentials. The open acknowledgement of the extreme poverty in which many Russians life can be seen in political events like the strange passing of a law allowing Russians to collect fallen trees, ‘for their own needs’.

Influential independent political observers like Valerii Solovei and Vladislav Inozemtsev draw pessimistic conclusions about the ‘extractive turn’. Mostly they view their fellow citizens as passive and lacking any agency, despite the obvious evidence to the contrary – the massive informal economy that sustains livelihoods and habitability above the bare subsistence level and is seriously disruptive to the state. Solovei paints a vivid picture of Russians as passive sponges to be wrung dry in any way possible by an emboldened state – where can people hide from taxes on fuel and cigarettes? (I guess you can anticipate my answer to him – in both cases it’s in the interstices of the informal economy). To be fair to him, he at least strikes a warning note: history shows that eventually people get fed up and social strife is the result. However, his remedy is predictably unimaginative, a bourgeois democratic revolution (without any messy involvement of ordinary people) such as what ‘could have been’ in 2011-12. But how realistic is political change without the engagement of people beyond metropolises? And how would a bourgeois democracy he envisage address the enormous structural inequalities and imbalances Russia faces? Doesn’t this approach just reproduce a ‘two Russias’ perspective so criticized by other observers such as Ilya Matveev? We can see traces of this stigmatizing perspective everywhere: the assumption that a ‘lack of culture’ or an ‘authoritarian personality’ prevents the ‘other’ Russians from seeing the light. On the latter, Carine Clement has recently taken this idea to task. In particular, she rejects the ‘mythical apoliticism of Russians’ and asks the question – if Russians’ ‘authoritarian’ thinking includes a strong element of critique of the existing social order, then to what degree is it really authoritarian?

Inozemstev’s approach is more interesting. He starts with the notion of popular disenchantment and elite indifference, but then links this to a more general pessimism.  Noting that the ‘new oil’ trope indicates people have awareness of how costly the elites are to them he despairs that ‘the authorities realise quite how broken the Russian population’s willingness to resist really is, from mass protests to even small-scale acts of dissent.’ Does this view make the mistake that only ‘open’ protest is a mark of resistance? Elsewhere Inozemstev actually hints at what is in plain sight: the informal economy as a bulwark against complete penury for many. He notes that even the Russian government openly acknowledges that 38 million people’s work and income is opaque at best to the state. I agree with him that most Russians want to hold down a legitimate employment in the formal economy. However, given such pessimism, even this is increasingly questioned by some of the already most vulnerable. The qualifying period for an old age pension will soon increase from 6 to 15 years, the social rights that accrue to a formally employed person are losing their value due to the erosion of the health system in general.  All in all Inozemstev proposes some incremental reforms that can be characterised as too little too late (tax free allowances on low incomes, assistance schemes like food stamps), which are regressive (increasing VAT) or even defeatist (corruption should be limited to the resource sector). Overall it looks like a kind a pale Fabianism with little scope for taking root.

In his latest piece Inozemstev is closer to some of the points I make in my previous post – detailing what the increasing in indirect taxation will mean to ordinary people – a real rise of around 10% in petrol costs and the real fall in incomes since 2008. Interestingly, given the ongoing ‘rubbish disposal’ protests, he points to the very large increase in household bills for waste disposal. This increase – a doubling has not gone unnoticed by ordinary people and they are up in arms about it – especially in places like the town I study which has been repeatedly the victim of fly-tipping of Moscow rubbish and which recently saw its head of the council’s environmental services jailed for taking bribes to allow such tipping.

Ekaterina Shulman uses the questionable assumptions and methodology of the World Values Survey data to address the topic of ‘turning the screws’ on ordinary people. She first argues that a shift in Russian values from ‘superatomisation’ characteristic of the 1990s to ‘conservative’ is somewhat positive as it facilitates collective action and sociality. A notable effect is the strengthening of weak ties and broadening of the scale of interpersonal trust especially among the young and dynamic. On the other hand, she sees in Russia the continuing legacy of totalitarianism: ‘secular, atomised society’ that produces the lonely distrustful individual with atrophied social skills.  Homo soveticus is very much still with us in her view. Consequently, she greets the shift in public opinion from ‘political security’ to ‘social security’ with some surprise (in reality this aspect of public opinion has always been there).

The beef I have with approaches like these is that the ordinary Russians who daily make decisions about how to live are presented as an undifferentiated mass – suffering from ‘learned helplessness’ (a phrase used by Ekaterina Shulman but also by Carine Clement) or as an unruly source of social unrest – the word ‘revolt’ (bunt) is reserved for them. At worst this ‘by-the-numbers’ approach gives the impression that ‘we’, the addressed middle-class audience of these pundits, should fear the ‘other’ Russia.  Solutions presented ring hollow – they are either a form of gradualism or legalism (vote, even if the field is rigged; use your right to agitate against a bad candidate; if only we just adhered to the Constitution; wait for those nostalgic old people to die). In my final post on this topic, I’ll make use of James Scott’s ideas of infrapolitics to talk more about everyday forms of resistance to the extractive turn.